That is incredible because Zynga has $1.2 billion in cash. Basically, the market values its business, which generates $1.2 billion per year, at $500 million.

Zynga is imploding. Sure, it's only losing a couple million dollars per quarter if you ignore noncash writeoffs, but every time they come out with a revised forecast, it's lower than expected. Management doesn't seem to have a handle on the problem.

So why would Yahoo want to own it?

The answer: one of Zynga's biggest problems is that it does not own its distribution platform. It depends on Facebook News Feed and Facebook Notifications. It also buys traffic from Facebook via ads.

To solve this problem, Zynga launched Zynga.com. It's never really taken off, however.

If Yahoo owned Zynga, Yahoo.com could be the Zynga.com that never was. Yahoo could funnel lots of free traffic traffic in Zynga games, reducing Zynga's ad spend (costs) and boosting user numbers (revenue). ComScore says Yahoo sites still have 170 million worldwide daily active users – not far off of Facebook's 300 million.

Zynga and Yahoo already tried a distribution deal once, and it never took off.

A source close to Yahoo's side of that deal says that Zynga would have gotten a lot more out of it if Zynga CEO Mark Pincus has been allowed to tweak the Yahoo homepage so that it would send more traffic to Zynga games.

Pincus and his Zynga game designers would also have to design games more suited to Yahoo's audience, which is a little older than Facebook's. But if there is any company in the world that can optimize and respond to data in that way, it's Zynga.

So, will a deal happen?

A source close to Yahoo says there might be a fit, but there is no rush because Zynga is getting cheaper by the second.

Yahoo has lots of cash, a huge business, and is not in particularly immediate dire straights. Marissa Mayer has a very patient board.

It might make sense for Yahoo to own Zynga some day, but Mayer isn't going to rush out and buy it for a billion dollars now when she could have it for a couple hundred million dollars later.